Sunday, 14 July 2013

jam yesterday, jam tomorrow

Bloomberg has thoughtful editorial critiquing the calls of one US senator, who urges de-vamping the financial sector by portraying it as the utility company it ought to be, as something dull and dutiful to discourage risky behaviour and swash-buckling.
While certainly individuals should not be lured into the industry over false-idols and misguided perceptions—rather than providers of a basic service, but the business of banking is inherently a gamble, and always has been, and corporate captains were able to transform something mundane and reliable, like the Electric Company, into the aphrodisiac called Enron, and it is an easy matter to portray banking, to fellow loan-officers and the public alike, as something sexy and promising. It would be an improvement, definitely, if there was just the aversion of boredom and not much chance to reap profits to be realised here, causing people to move along, but being boring may just be another institutional veil and a reform in image that does not go far enough. Using concrete examples, the Bloomberg piece suggests that people should not be shielded from the native terrors and hazards on trying to skim an honest transaction fee off the differentials between savings and loans. Industry collusion for cheap and easy credit and governmental assurances, depositor-insurance, the American-Dream, bail-outs and monetary policy have not mitigated the peril of tight margins but rather made people forget about how really frightening the consequences of this pyramid-scheme can be when it does not work out.